Multiple Choice
Real/permanent accounts are those that carry over from one period to the next, with a continuing balance in the account. Examples are asset accounts, liability accounts, and equity accounts. In contrast, revenue accounts, expense accounts, and dividend accounts are not real/permanent accounts.
Closing entries are used to transfer the contents of the temporary accounts into the permanent account, Retained Earnings, which resets the temporary balances to zero, enabling tracking of revenues, expenses, and dividends in the next period.
Expense accounts and dividend accounts are credited during closing. This is because closing requires that the account balances be cleared, to prepare for the next accounting period.
Income Summary is a super-temporary account that is only used for closing. The revenue accounts are closed by a debit to each account and a corresponding credit to Income Summary. Then the expense accounts are closed by a credit to each account and a corresponding debit to Income Summary. Finally, the balance in Income Summary is cleared by an entry that transfers its balance to Retained Earnings. Thus, it is used in three journal entries, as part of the closing process, and has no other purpose in the accounting records.
The fact that Income Summary has a credit balance (of any size) after the first two closing entries are made indicates that the company made a net profit for the period. In this case, a credit of $125,500 reflects the fact that the company earned net income of $125,500 for the period.
The post-closing trial balance will include only the permanent/real accounts, which are assets, liabilities, and equity. All of the other accounts (temporary/nominal accounts: revenue, expense, dividend) would have been cleared to zero by the closing entries.
Working capital is calculated by subtracting current liabilities from current assets. The result indicates how well the company can pay bills as they come due, which is sometimes referred to as the company’s liquidity position.
(1) First is the Unadjusted Trial Balance, which summarizes the account balances of all accounts in the ledger, before period-end adjustments . (2) Next, the Adjusted Trial Balance summarizes the account balances of all accounts in the ledger, after adjusting entries have been posted. (3) Finally, the Post-Closing Trial Balance summarizes the account balances of all accounts in the ledger, after closing entries have been posted.
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- Authors: Mitchell Franklin, Patty Graybeal, Dixon Cooper
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- Book title: Principles of Accounting, Volume 1: Financial Accounting
- Publication date: Apr 11, 2019
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- Section URL: https://openstax.org/books/principles-financial-accounting/pages/chapter-5
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COMMENTS
Jo's Market makes a credit sale for $1,000 with terms of 2/10,n/30. The cost of the merchandise is $400. The required journal entry to record the sale and cost of the sale is: debit Accounts Receivable $1,000; credit Sales $1,000; debit Cost of Goods Sold $400; and credit Merchandise Inventory $400.
How much is net sales? $8,500. Net income is $15,000, operating expenses are $20,000, and net sales total $75,000. How much is cost of goods sold? $40,000. which of the following would appear on both single-step and multi-step income statement? gross profit. other expenses and losses. cost of goods sold.
Financial Accounting Chapter 5 Learn with flashcards, games, and more — for free. ... Homework short answer questions ACG 3173 exam 1. 7 terms. Ains0415. Preview. ACCT 206 Video Lecture & Assessment LO 8-5, 6, 8, 10, 11. Teacher 33 terms. marxs15. Preview. English Midterm vocab. 30 terms. Maggie_Merrick.
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Step-by-step solution. Step 1 of 5. Cost of goods purchased. The expenses incurred to acquire the goods is termed as cost of goods purchased. The cost of goods purchased is computed by adding the transportation-in costs with the initial purchase cost and, then deducting the purchase discount and the purchase returns and allowances. Current ratio.
An expense is a decrease in equity resulting from the costs of operating the business. The purpose of an expense is to produce revenue or to help with revenue-making activities. Net income is the difference between total revenues and total expenses when revenues are more than expenses.
5. Expense accounts and dividend accounts are credited during closing. This is because closing requires that the account balances be cleared, to prepare for the next accounting period. 7. Income Summary is a super-temporary account that is only used for closing. The revenue accounts are closed by a debit to each account and a corresponding ...
CH5. Problem. 1CC. Step-by-step solution. Step 1 of 8. 1. Journal entry refers to the recording of financial transactions in the journal of a company. It is a formal entry used to recognize the business transaction with date and amount. They are the first step in the accounting cycle and are used to report the business transactions and events ...
Glencoe Accounting Chapter 5: Transactions that Affect Revenue, Expenses, and Withdrawals Homework Practice. Analyzing Transactions. Instructions. For each transaction, write a sentence describing the transaction. Cash in Bank. Acc. Rec. Supplies. Accounts Payable. Owner's Capital.
The physical count is used to determine if there has been any theft, loss, damage or errors in inventory. Determine which of the following statements are correct regarding the difference between physical flow and the cost flow of inventory. Cost flow is an assumption about which goods/items are sold.
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Chapter. CH5. Problem. 1BTN. Step-by-step solution. Step 1 of 2. Some business invest huge amounts in inventory & such goods are sold at higher price to earn profit. Such business are called merchants. Operating cycle of merchandise is somehow different from service sector.
We will discuss how we solve the homework problem using the various inventory calculations.
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Step 4 of 26. Journal entry to record the cash received with 5% discount from accounts receivable for $3,000 is given below: Cash and sales discount are debited due to increase in assets and loss. Accounts receivables are credited due to decrease in assets with the amount of $3,000. Step 5 of 26. Working note:
The company has $10,000 in its checking account, $20,000 in its savings account, $1,000 in petty cash, $25,000 in one-year Treasury bills, $15,000 in a money market fund.
Chapter 5 Accounting homework. Notes. Course. Accounting 1 (FMGT 1100) 114 Documents. Students shared 114 documents in this course. University British Columbia Institute of Technology. Academic year: 2017/2018. Uploaded by: Anonymous Student. This document has been uploaded by a student, just like you, who decided to remain anonymous.
Chapter. CH5. Problem. 1C. Step-by-step solution. Step 1 of 1. C Parking records its revenues on cash basis. As per the auditors' suggestions, they have decided to record it as per the accrual basis from the beginning of next year and make a full disclosure regarding the same in the notes to financial statements.
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ACC 330 Project One Milestone One. ACC 330 Module Two Income Assignment. ACC 330 Project One Milestone Two. ACC 330 Final Project Three Formal Letter to Client. 3-1 Activity: Chapter 5 McGraw Hill CONNECT Homework reggie, who is 65, had agi of in 2021. during the year, he paid the following medical expenses: orugs (.